Asian Stocks Fall as U.S. Credit Outlook Cut; Oil Prices Drop - Bloomberg

Asian stocks fell, leading the benchmark index lower for a third day, after Standard & Poor’s Ratings Service cut the U.S. long-term credit outlook, fueling concern that a recovery in the global economy may slow.

Toyota Motor Corp. (7203), the world’s No. 1 carmaker, dropped 2.5 percent in Tokyo. Samsung Electronics Co., which receives 20 percent of its revenue from America, lost 1 percent in Seoul. BHP Billiton Ltd. (BHP), Australia’s biggest oil producer, dropped 1.6 percent after oil and metal prices declined. Tokyo Electric Power Co., the operator of the crippled nuclear station in Japan, fell 5.4 percent after robots detected radiation too toxic for humans in two of its buildings.

The MSCI Asia Pacific Index fell 0.9 percent to 134.47 at 10:09 a.m. in Tokyo, with about six shares dropping for each that climbed on the 1,023-member gauge. The measure fell 0.5 percent last week, reversing three straight weeks of gains.

“If we get down to a point where the U.S. has its debt downgraded, the deflationary effects will be felt globally,” said Melbourne-based Tim Schroeders, of Pengana Capital Ltd., which manages about $1 billion. “A lot of credit is priced off U.S. denominated debt and those effects will be felt around the world.”

Japan’s Nikkei 225 (NKY) Stock Average fell 1.2 percent. Australia’s S&P/ASX 200 Index slumped 1 percent and New Zealand’s NZX 50 Index lost 0.5 percent. South Korea’s Kospi index slipped 0.3 percent.

U.S. Futures

Futures on the Standard & Poor’s 500 Index fell 0.3 percent today. In New York yesterday, the S&P 500 lost 1.1 percent, its biggest retreat since March, after S&P lowered its outlook on U.S. credit outlook to “negative.” The U.S. government risks losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt, the ratings agency said.

Crude oil for May delivery slid 2.3 percent to $107.38 a barrel in New York, near a three-day low after China, the world’s second biggest crude-consuming nation, increased banks’ reserve requirements to cool inflation, signaling fuel demand growth may slow. The London Metal Exchange Index of six metals slumped 1.9 percent yesterday, the lowest since March 16.

The MSCI Asia Pacific Index lost 1.5 percent this year through yesterday, compared with gains of 3.8 percent by the S&P 500 and 1 percent by the Stoxx Europe 600 Index. Stocks in the Asian benchmark are valued at 13 times estimated earnings on average, compared with 13.4 times for the S&P 500 and 10.9 times for the Stoxx 600.

To contact the reporter on this story: Anna Kitanaka in Tokyo